Requirement 9d.
Primary Government
Governmental Business-type Component
Assets Activities Activities Total Units (none)
Cash 1,714,522$ 746,018$ 2,460,540$
Receivables (net) 412,920 247,454 660,374
Internal balances (50,000) 50,000 –
Investments 200,000 200,000
Inventories 12,000 141,299 153,299
Restricted cash 70,098 70,098
Capital assets (net) 45,015,100 18,020,049 63,035,149
Total Assets 47,304,542 19,274,918 66,579,460
Liabilities
Vouchers payable 611,396 175,441 786,837
Accrued interest payable 160,000 477,510 637,510
Customer deposits 70,098 70,098
Current portion of long-term debt 1,125,000 1,125,000
City of Bingham
Statement of Net Position
As of December 31, 2020
Requirement 9d.
Net (Expense) Revenue and
Program Revenues
Changes in Net Position
Operating Capital
Primary Government
Charges for Grants and Grants and Governmental Business-type Component
Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Units (none)
Governmental Activities:
General government 2,701,316$ 1,040,000$ 515,000$ – (1,146,316)$ (1,146,316)$
Public safety 5,066,294 319,000 (4,747,294) (4,747,294)
City of Bingham
Statement of Activities
As of December 31, 2020
Requirement 9d.
Total
General Debt Service Governmental
Assets Fund Fund Funds
Cash 954,922$ 759,600$ 1,714,522$
Taxes receivable delinquent (net) 310,955 46,000 356,955
Interest and penalties receivable on taxes (net) 46,845 9,120 55,965
City of Bingham
Balance Sheet
Governmental Funds
As of December 31, 2020
Requirement 9d.
City Hall Annex Total
General Construction Debt Service Governmental
Fund Fund Fund Funds
Revenues
Taxes—real property 6,832,000$ 685,000$ 7,517,000$
Taxes—sales 748,000 748,000
Interest and penalties on taxes 23,860 600 24,460
Licenses and permits 479,000 479,000
Expenditures
General government 1,907,316$ 1,907,316
Public safety 3,657,294 3,657,294
Public works 1,752,781 1,752,781
Health and welfare 1,062,873 1,062,873
Culture and recreation 1,062,614 1,062,614
Other Financing Sources (Uses) –
Premium on bonds 75,000 75,000
Proceeds of bonds 7,500,000 7,500,000
City of Bingham
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the Year Ended December 31, 2020
Requirement 9d.
Total fund balances 1,265,126$
Capital assets used in governmental activities are not
financial resources and therefore are not reported in in the
funds
45,015,100
Long-term liabilities, including unamortized premium,
Accrued interest on bonds payable is not due and
payable in the current period and therefore is not reported in
the funds
(160,000)
Deferred inflows of resources associated with unavailable
City of Bingham
Reconciliation of the Governmental Funds Balance Sheet
to the Government-wide Statement of Net Position
As of December 31, 2020
Requirement 9d.
Net changes in fund balances—total governmental funds 155,082$
Amounts reported for the governmental activities in the
statement of activities are different because:
Governmental funds report capital outlay as expenditures;
however, in the statement of activities, the cost of these assets
Depreciation expense reduces net position but has no effect
on fund balances.
Bond proceeds provide current financial resources to
governmental funds, but issuing debt increases long-term
liabilities in the statement of net position. Repayment of bond
(includes unamortized premium of $68,750).
Some revenues reported in the statement of activities are not
considered “available” in governmental funds, hence they are
reported as deferred inflows of resources in governmental
funds until recognized as revenue. (This represents the
difference in total deferred inflows of resources between the
governmental funds and government-wide activities at the
beginning and end of the year.)
(2,300)
Some expenses reported in the statement of activities do
not require the use of current financial resources and therefore
are not reported as expenditures in governmental funds.
which includes $6,250 of premium that was amortized.**
* Recall that the General Fund had an equipment expenditure
of $72,500.
City of Bingham
Reconciliation of the Statement of Revenues, Expenditures,
and Changes in Fund Balances of Governmental Funds
to the Government-wide Statement of Activities
For the Year Ended December 31, 2020
Requirement 9d.
Water Utility
Fund
Totals
Assets
Current assets:
Cash 746,018$
Customer accounts receivable (net) 247,454
Due from other funds 50,000
Utility plant in service (net) 16,976,522
Liabilities
Current liabilities:
Vouchers payable 175,441
Accrued interest payable 477,510
Total Current Liabilities 652,951
Internal Service
Funds
City of Bingham
Statement of Net Position
Proprietary Funds
As of December 31, 2020
Business-type Activities
Governmental
Requirement 9d.
Water Utility
Fund
Totals
Operating Revenue
Sales of water (net of $4,328 provision 3,169,546$
for doubtful accounts)
Operating Expenses
Operation 922,904
Non-operating Expenses
Internal Service
Funds
City of Bingham
Statement of Revenue, Expenses, and Changes in Net Position
Proprietary Funds
For the Year Ended December 31, 2020
Business-type Activities
Governmental
Requirement 9d.
Water Utility
Fund
Totals
Cash flows from operating activities:
Cash received from customers 3,070,854$
Cash paid to employees for services (815,150)
Cash paid to vendors for supplies (352,600)
Internal Service
Funds
City of Bingham
Statement of Cash Flows
Proprietary Funds
For the Year Ended December 31, 2020
Business-type Activities
Governmental
Indicator (Ill. 10-3) Formula Source Values Calculation
Revenue Measures:
General Fund intergovernmental revenues General fund financial statements 545,000$
Total General Fund revenues General fund financial statements 9,734,360$
Chapter 10 – Ratio Analysis
1) Intergovernmental revenues 0.056
Total operating expenditures* Governmental fund financial statements 9,788,378$
Chapter 10 Interpretation of Ratios
(Note to Instructor – It is not expected that your students would need to prepare all of the
following ratios.)
1) At 5.6% of total revenues, it does not appear that intergovernmental revenues constitute a
2) This ratio, while slightly greater than one (1.013), is considered to be about average (1.0 is
considered average).
4) At a ratio of .031, the fund balances ratio is less than .05. Generally, a ratio of .05 or less is
5) Bingham’s liquidity is quite strong with a ratio of 2.895. The benchmark for this ratio is 1.0.
6) With a ratio of .038, Bingham’s long-term debt ratio is well below the ratio of .10 that would
8) Bingham’s debt service ratio is relatively low at .083. A warning value would be .20 or
greater.
10) At a ratio of .377, approximately 37.7% of the city’s assets are held by creditors, the rest of
the assets are held by the citizens.
11) The current ratio for Bingham is 1.129, indicating a stable financial position ratio; however,
12) The interperiod equity ratio of 0.791 is less than one, indicating that approximately 79% of
13) The bonded debt per capita is $227.58. Without additional information about the population
demographics, such as unemployment, average salaries, overlapping debt and taxes per
14) At a ratio of .503, only half of the available legal debt limit has been used.
Overall the City of Bingham seems to be in an acceptable financial position. The ratios indicate
that the city will be able to cover its obligations in the short term. The financial condition of the
city is stable; however, the city will want to monitor its liabilities and debt position, since the
current liabilities ratio and the current ratio are a bit worrisome and more than half of the
Chapter 11
An unmodified auditor’s report, similar to that shown in Illustration 11-1, appears to be
appropriate for the City of Bingham for the year ended December 31, 2020. Nevertheless, some
students may have issued a “qualified” report for some perceived reason. If so, it should use the
wording discussed briefly in Chapter 11 and specified in the audit guide. If not, this will provide
you with an opportunity to explain to the student why the specified report wording is critical to
an auditor.
An unmodified audit report on the City of Bingham should appear as follows:
The Honorable Mayor, City Council, and City Manager, City of Bingham
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the business–type activities,
each major fund, and the aggregate remaining fund information of the City of Bingham, as of and for the year ended
we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,
financial position of the governmental activities, the business–type activities, each major fund, and the aggregate
remaining fund information of the City of Bingham, as of December 31, 2020, and the respective changes in
financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting
principles generally accepted in the United States of America.
Other Matters
an opinion or provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Additional explanatory sentences may be required if the audit is performed in accordance with
Government Auditing Standards. For the purposes of the audit report, it was assumed that at a
minimum a required management’s discussion and analysis was prepared. It is known that a